Working from home: The impact on the property sector

March 3, 2022

Stuart Woolgar, CEO of Global Guardians Management, reflects on how the pandemic has affected working patterns along with the impact of working from home on the property sector

As CEO of the largest property guardian company in London and a long-established and recognised expert in vacant property security, I am currently unsure whether to prepare for a large influx of public sector buildings to secure, or not, even if my phone is currently ringing off the hook from all sectors of the industry.

In January, Property Week asked its readers whether more organisations would offload office space in 2022. Just 20% said ‘no’, while 13% said ‘maybe’ and a whopping 67% said ‘yes’. Opinion from across the property sector reflects an increasing desire for more environmentally friendly offices, driven by both employees and investors. (1)

The latest RICS market survey found that while nearly a third of respondents didn’t think an office was essential to business success, it also revealed that members strongly believed that both capital values and rents for prime offices would increase markedly over the year ahead and that those for secondary offices would tumble. (2)

So, while the long-term impact of the pandemic is unclear for this sector, if an organisation still sees the value in having office space, the signs are they want it to be both attractive and sustainable. In short, landlords of modern, grade-A space are fine. Those who own secondary stock may well have to decide whether to upgrade their space or offload it for a lower price.

But how does this information impact our Government, other public and commercial sector office buildings?

The end of restrictions

At the end of January, the requirement to Work From Home (WFH) ended and senior UK Government ministers, from the Prime Minister downwards, urged civil servants and all local government staff across the country to set an example and return to their offices to help with the drive to kick-start the economy.

The small shops, bars and other services around city centres and business parks that relied on office workers for their trade, cheered and breathed a sigh of relief. Many had already gone out of business and the rest were barely hanging on.

However, the Public and Commercial Services Union, which represents civil servants and other public sector workers, warned against a ‘headlong rush’ (3) back to the workplace. The FDA union also reacted angrily, saying the world of work had ‘changed for good’. This led to one former minister, who had campaigned for an end to the restrictions, pithily commenting, ‘When they eventually go back to their offices there won’t be anywhere to get a sandwich from or sit down in a pub – they’ll all be closed!’. (4) Whatever the rights and wrongs of the argument, the fact is the situation is still very fluid as organisations try to find the best way forward for themselves and their staff.

Against this background, the Government Property Agency (GPA) published a State of the Estate Report, also in January, that revealed the Whitehall ‘campus’ and other buildings in the capital are costing £621 million a year to run. They currently house around 68,000 full-time equivalent staff, giving a cost per head of £9,132. The Report highlights the drive to move staff out of London and cut running costs, but, if the mooted plan goes ahead, there will only be capacity for 50% of staff to be at their desks from 2030. This 50% reduced footprint, compared to a 2019 baseline, would comprise c.20 ‘core’ buildings housing c.40,000 FTEs at a 50% attendance rate (i.e. there will be capacity for no more than 20,000 individuals at any one time).

A Government source insisted the proportion working from home would be significantly lower than 50%, and some staff are likely to be out of the office on any given day due to rota patterns, meetings or holidays, as well as working from home, but a hybrid working pattern appears to be the strategy.

This doesn’t quite seem to be what the Prime Minister and his Cabinet colleagues had in mind, and former Tory leader, Sir Iain Duncan Smith, was dismayed. “It’s all nonsense,” he said. “The truth is that you need civil servants in their offices because things happen…in politics quickly, sharply that you sometimes were not anticipating. Politics demands that the civil service are there. Government is not like running a business. There are so many things going on that can go on and change. The idea you have 50 per cent of the workforce in their homes is ridiculous when loads of the people who service them – delivering food, getting their books sold to them, working in warehouses – they can’t work from home.” (5)

So there it is: conflicting and mixed messaging and not quite the example senior ministers had in mind. For myself, I have to say I currently find it frustrating when I call an organisation and want to speak to someone only to be told they’re ‘not in the office’ or ‘now work from home’ but their contact details don’t reflect this. No mobile numbers or phones diverted. In these days of super-efficient technology, that’s not a difficult thing to organise, or so one would think. Hopefully, if this hybrid way of working is to become the norm, organisations will get themselves and their comms sorted, quickly. There are times you need to speak to people in person; emails or texts aren’t appropriate or are too slow.

How all this will reflect on the GPA’s estate of London buildings remains to be seen, and their future planning, and likewise for local authority and other public office buildings across the country, but it does suggest there will be a lot of older office buildings sitting empty for quite a time, while their owners watch and wait for the working world to sort itself out and finally settle down.

And as we know, an empty building is a magnet for trouble: anti-social behaviour, squatting, graffiti, criminal damage, fly-tipping…the list is endless and hugely costly to put right. But it can be a simple and inexpensive problem to solve with the use of professional guardians in the property, who can prevent it all. Security by occupation.

While the future of the building is debated, and it sits in mothballs for months or even years, it can be protected at the same time as providing a home for key or professional workers who need to live and work in city centres without a lengthy or costly commute or having to pay a high rent. Win-win all round. Just pick up your phone and ring my office for more information. We’re always there!